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In the News
November 11, 2008 Completion Of REX East Pipeline To Launch Fierce Interregional Battle For Market Share Northeast pricing premiums west of regional pipeline capacity constraints will experience significant downward pressure starting in June 2009. Appalachian producers may be among hardest hit. |
 To request more information about the BENTEK Catch the Wave™ Retainer Service and the Northeast Observer, click here |
HOUSTON (November 11, 2008) - A new Market Alert released by BENTEK Energy, LLC, details the potential market disruption expected to occur in June 2009 with the completion of the REX East pipeline into Lebanon, OH, an important supply gateway into the Northeast natural gas market. Upon completion of this leg of the REX system, approximately 1.6 billion cubic feet per day (Bcf/d) of Rocky Mountain natural gas will slam into Lebanon at the same time increased production from Mid-continent unconventional shale and tight sand gas is flowing east, and Appalachia producers are ramping up production from the Marcellus Shale.
"These supplies will move into the Northeast market regardless of producer budget cuts due to the recent financial crisis," noted E. Russell (Rusty) Braziel, managing director of BENTEK Energy. "Rockies producers are the largest holders of firm capacity on REX, and these companies can be expected to utilize 100% of the pipeline capacity to move their gas toward more lucrative markets in the Northeast. Unfortunately, neither the pipeline delivery capacity into the region or the demand growth in the Northeast is adequate enough to absorb all of these new supplies."
The Northeast market is by far the largest and most dynamic regional natural gas market in North America and is well-served by a network of interstate pipelines, local distribution companies and one of the highest concentrations of natural gas storage in the world. Such an attractive market environment has encouraged the development of REX and other pipeline expansions targeting the historically high prices in the region. However, the ability of these supplies to flow west to east is constrained by pipeline capacity, particularly during the winter peak demand season. Even if sufficient additional pipeline capacity is built, the rate of demand growth in the Northeast is limited, not nearly enough to absorb the more than incremental 5.0 Bcf/d that could be available to flow eastward by 2011.
"We expect to see a traffic jam of huge proportions, with no immediate solution on the horizon to alleviate the gridlock," Braziel observed. "To some extent, the pricing pressures experienced by Rockies and Texas producers will move eastward into Northeast pricing hubs that have traditionally enjoyed premium pricing. With additional infrastructure construction being completed and new projects coming online over the next few years, we expect to see significant volatility in regional price differentials for a while to come."
Braziel added that the start-up of the Millennium Pipeline during the fourth quarter of 2008 will provide a preview of upcoming market shifts. Millennium is the first major interstate pipeline project to be brought online in the Northeast for nearly 10 years. It will add significant delivery capacity into a region that is pipeline constrained to flow volumes further east of Leidy, PA. As a result, Millennium supplies are expected to put downward pressure on a number of premium Northeast markets, tightening spreads between upstream markets and key pricing hubs at TETCO M3, Algonquin City-gate, Iroquois Z.2, Transco Z.6 NY and Transco Z.6 non-NY.
"Perhaps the biggest winners in this coming supply-demand market imbalance will be the holders of firm pipeline transportation capacity eastward from the constrained areas around Lebanon on TETCO, Dominion and TCO (Columbia Gas)," Braziel noted. "Appalachian producers, accustomed to moving supplies eastward on an interruptible transportation basis will be required to sell increasingly to holders of firm transportation or to acquire firm transportation to ensure their volumes won't be curtailed."
To provide insight into these issues, BENTEK's exclusive three-part Market Alert series examines the impact of the anticipated market imbalances and gas flows and price implications from the date the REX East pipeline goes into service and beyond. BENTEK calls this Market Alert series "Catch the Wave™." The title refers to BENTEK's proprietary model identifying four regional "waves" of west-to-east capacity constraints and the resulting purchasing, sales and trading opportunities that will result as supply shifts move eastward.
In addition, BENTEK has launched the Northeast Observer™ to provide daily updates on market developments and a weekly comprehensive analysis of all market factors pertinent to the Northeast region. For more information about BENTEK's "Catch the Wave™" Market Alert series, go to www.bentekenergy.com or call BENTEK at 888-251-1264.
About BENTEK Energy, LLC
BENTEK Energy, LLC, is an energy markets information company based in Evergreen, CO. The company brings customers the analytical tools and competitive intelligence needed in order to make critical, bottom-line decisions in today's natural gas and power markets. Additional information about BENTEK Energy is available on the Web at www.bentekenergy.com.
Ethanol Industry Bankruptcies Could Hit Industrial Gas Demand
Several US ethanol producers have filed for bankruptcy in recent weeks, which is bad news for natural gas bulls.
Verasun, the second largest US ethanol producer, filed for bankruptcy last week, following smaller producers Bioenergy, Ethanex, Greater Ohio Ethanol and Gateway Ethanol who did the same.
Since the use of natural gas in the production of ethanol and ammonia have been the key factors behind rising gas demand, industrial use of natural gas may flatten in coming months (NGW Aug.18,p1).
So far in 2008, 7.5 billion gallons of ethanol have been produced in the US. Production has far outpaced 2007 levels, which had reached 5.35 billion gallons this time last year to approach 6.5 billion gallons of total output in 2007.
"I don't think that the growth will be as prolific as it was between 2007 and 2008, but we're still on an upward trajectory. The slope of your curve will be muted a little bit," said Jack Weixel, manager of energy market fundamentals for Denver-based BENTEK Energy.
A number of causes may explain the string of bankruptcies. For one, volatile corn prices and swinging crude oil prices have created market uncertainty for producers.
For a complete copy of this story from Natural Gas Week, please click on the following link http://www.energyintel.com/.
U.S. Gas Growth Seen Cutting Back Canadian, LNG Imports
By next year the United States is expected to produce more natural gas than it's ever produced in history, and the new supplies will pressure pipeline systems and likely damage the prospects for Canadian imports and liquefied natural gas (LNG) facilities, said BENTEK Energy LLC CEO Porter Bennett.
Bennett was a keynote speaker Thursday at the LDC Forum Canada, which was held this year in conjunction with Canada's Industrial Gas Users Association. When he was first asked to speak a few months ago, he said he then had planned to discuss growing gas demand and shrinking gas supply. But that's not what the world looks like today, he told the audience in Toronto.
"Most people don't recognize that gas production is growing that quickly, certainly not the policy people," Bennett noted. "It's not only how much it's growing, but where it's growing. It's growing all over the place..." The new domestic gas has overwhelmed the U.S. pipeline infrastructure, which in turn has backed up Canadian imports, he said.
Through July, U.S. gas output is up nearly 9% from January-July 2007, he noted. Output is likely to be down for September because of the shut-ins from hurricanes Gustav and Ike, but by end of this year, "United States gas production will be up by at least 6% and more like 8-9% for the year...There's been a decline in U.S. demand, and supply is building in a significant way," he said.
For a complete copy of this story from Natural Gas Intelligence, please click on the following link http://intelligencepress.com/.
In our interview last week with Michael Haigh of SocGen, the Q3 Best Gas Storage Forecaster in the Land, the NY-based analyst pays homage to BENTEK Energy for essentially raising the industry bar on gas market forecasting. ["While a few years back this process (gas market forecasting) may have been more art than science, science wins out today. That's not to say we're not constantly meeting and talking with traders or rig operators, energy companies or others in the marketplace. This is also crucial to what we do." He said BENTEK Energy can take a good bit of credit for advancing the science of storage forecasting. "Today there is far more equation-based decision-making in this area, and BENTEK can take a lot of credit for that."] We have to agree. Over the past several years, the company's steady flow of new products and services to the sector has served as the ultimate equalizer for traders, strategists, and planners hoping to get an ever-more granular snap-shot of the natural gas sector.
This week, we present the first of a suite of new pipeline transportation products BENTEK plans to roll out in the month ahead. Capacity Tracker is a quarterly publication (plus intra-quarter market alerts if important developments occur) with associated spreadsheets "designed to interpret the market implication of developments in natural gas pipeline capacity markets," BENTEK's Rusty Braziel says. The mechanics of pipeline capacity can indeed be an arcane science, "but increasingly the availability of capacity is having a huge impact on basis relationships, pipeline construction projects and the value of natural gas reserves. Concerns regarding the credit worthiness of pipeline shippers can also be expected to impact the behavior of market participants."
For a complete copy of this story from the Desk, please click on the following link http://www.scudderpublishing.com/.
For more information about Capacity Tracker™ from BENTEK, please click on the following link
http://www.bentekenergy.com/Documents/BENTEK_CapacityTracker_Vol1No1_080922.pdf
GOM Production Begins to Return Just in Time for Ike Shut-In
The impact of Hurricane Gustav's impact on the Gulf has largely subsided, but operators in the region are now preparing for Hurricane Ike. Companies in the Gulf reported little damage to facilities in the region from last week's storm, but have had to deal with a lack of power, which has kept production largely shut-in for the last two weeks.
As of Sept. 9, the Minerals Management Service reported roughly 64.8% of the region's 7.4 billion cubic feet per day (cf/d) natural gas production remained shut-in. The Henry Hub is still dealing with a lack of compression due to power outages, but all other operations remain in place. The Independence Hub resumed operations following minor repair work. A shutdown at each hub is likely ahead of Hurricane Ike.
Production in Louisiana's Lake Jackson (39 million cf/d), Lake Charles (108 million cf/d), Lafayette (866 million cf/d), Houma (650 million cf/d) and New Orleans (3.1 billion cf/d) districts remained shut-in from Hurricane Gustav.
Thus far these shut-ins have had minimal effect on the natural gas production in other parts of the country, which have not increased production to make up for shut-in Gulf gas. "We haven't seen a large influx of supply. Everyone kind of yawned because of all of the production growth we're seeing elsewhere," BENTEK Energy's Rocco Canonica told GPR.
Canonica stated there has been an increase of about 150,000-175,000 dekatherm per day in Canadian imports into the Northeast. LNG imports also showed limited growth with the Elba Island terminal showing less than 100,000 dekatherms per day. Lake Charles LNG, which has largely been non-existent in LNG imports this year was up to about 135,000 dekatherms per day Canonica said.
"Demand has been reduced quite a bit with all of the rain and power outages that have helped things out a bit. If it heats up in the Northeast this week and Hurricane Ike wipes out a bunch of production, there could be a different situation with supply picking up," he said.
For a complete copy of this story from GPR, please click on the following link: http://worldfuels.com/
REX work sends Rockies cash tumbling below $1
After a brief but high-profile skirmish involving several shippers and the Federal Energy Regulatory Commission, Kinder Morgan went ahead with its plans to start hydrostatic testing today on the Rockies Express Pipeline, sending spot prices at key Rockies points plunging as much as $4/MMbtu to their lowest levels since November. Prices on Kern River Gas Transmission at the Opal, Wyoming, plant traded between a low of 45 cents and a high of $1.65 to average around 70 cents. Northwest Pipeline's Wyoming pool and Colorado Interstate Gas also dropped to 10-month lows as they average 55 cents and $1, respectively.
Prices moved steadily higher throughout the session, however, as players got caught short. "You don't want to be short when it's that low of a price," one Rockies trader said. "Every spread out of Dodge is so deep in the money there's no way a shipper is going to want to be stranded there trying to by gas. Not at these prices." Spot prices were "around $5 on Friday for Monday [flow] because of a bit of cold weather, but all of a sudden it's down to 50 cents?" another regional trader said, noting the that most exit routes out of the Rockies were at or near capacity and "there's not a lot of room to stick gas. If [testing] has been postponed, it wouldn't have this much of a bloodbath."
Kim Ward, director of energy analysis with BENTEK Energy, concurred, noting that "it would have been a lot more beneficial to the shippers themselves if [Kinder Morgan] had chosen a month other than a shoulder month to have maintenance. Prices get depressed at this time anyway, so they just made it worse." Shippers had petitioned FERC to force a postponement but the commission declined to do so on Tuesday.
For a complete copy of this story from Gas Daily, please click on the following link www.platts.com.
Gas and Gustav: Natural Gas, the Hurricane-Safe Fuel
Chesapeake Energy Corp. has been running advertisements promoting compressed natural gas as a cheaper, more environmentally sound and home-grown alternative to gasoline. The campaign's kicker is, "Rescue our dollar. Rescue our drivers. Rescue our environment."
Maybe they should add another reason: natural gas production is less vulnerable than ever to hurricanes that batter the Gulf Coast.
According to consultant and gas market tracker Bentek Energy LLC, the boom in shale gas is creating substantial new flows of natural gas - from ground to consumer - that avoid the storm-prone coast and Gulf of Mexico.
Bentek is tracking 75 pipelines in various stages of completion that draw gas from the Barnett Shale in north Texas, East Texas, Arkansas' Fayetteville Shale and the buzz-generating Haynesville Shale in northern Louisiana. The gas is generally flowing through northern Louisiana and connecting with Williams Cos.' Transco pipeline, which takes it up to New York City. All of this pipeline infrastructure is more than a couple hundred miles inland.
These expansions don't include all the new capacity in pipelines out of the Rocky Mountains and across the Midwest into the East Coast.
Natural gas is detouring away from the Gulf Coast in part because of rapidly growing gas production in northern Texas and Arkansas. But reliability is another factor, says Russell Braziel, managing director of Colorado-based Bentek. "Natural gas consumers want to avoid the risk of gas coming from the Gulf Coast," he says.
Natural gas production in the Gulf of Mexico has been falling in recent years and onshore gas production has grown quickly. Mr. Braziel says some traditional offshore supplies will be displaced by the new onshore gas.
Gustav doesn't appear to have done much damage to the Gulf Coast gas infrastructure, but hurricanes Ivan, Katrina and Rita did, and forced prices up.
For a copy of this story from the Wall Street Journal, please click the following link: http://online.wsj.com
A Push to Wrest More Oil From Land, but Most New Wells Are for Natural Gas
With the advent of $4-a-gallon gasoline has come a bruising debate in Congress over whether to intensify efforts to drill on federal lands, including part of the Arctic National Wildlife Refuge in Alaska. But while those hoping to lower prices at the pump are clamoring for new oil, most of the new onshore drilling of the past seven years has produced natural gas, not oil.
The Bush administration, in its effort to expand energy production, has issued more than three times the number of well-drilling permits on Western lands as in the Clinton administration's last six years. But oil production in that region during the Bush years is 12 percent below average levels from the Clinton era, according to federal data.
"You have to start with the recognition that most wells drilled in the Rockies are not oil wells - they are gas wells," said Porter Bennett, the president and chief executive of Bentek Energy, one of the industry's largest research firms. "There would never be an expectation of huge returns on the oil side," he added.
"If you restrict drilling," said Mr. Bennett of Bentek, "you'll go from a situation where we're growing one billion cubic feet in production a day to a situation where you're flat or declining in two years" - as happened in the Powder River basin six years ago after environmental restrictions tightened.
For a complete copy of this story from the NY Times, please click the following link: http://www.nytimes.com/
Bentek: Southeast/Gulf Coast Pipes Full in Two Years
Pipeline capacity out of the Southeast/Gulf Coast region is expected by Bentek Energy LLC to fill in less than two years, with outbound capacity utilization to hit 100% by winter 2009-2010. Look for aggravated gas-on-gas competition between the region and Rockies producers, the research and analysis firm warns in a new report.
In the third portion of its "I of the Storm" report series Bentek evaluates the impact of anticipated changes in gas markets nationwide as more than 75 gas pipeline, storage and liquefied natural gas (LNG) terminal projects are completed and go into service in the Southeast/Gulf Coast region between now and 2012.
The report explores current tight outbound pipeline capacity in the region, existing bottlenecks that constrain deliveries to such key markets as Florida and the Northeast, and insufficient planned outbound capacity expansions. This sets the stage for future excess supply buildup in the Southeast/Gulf Coast by as early as 2010, just as more production comes onstream and moves east into the region from hot unconventional shale gas basins. This regional supply surplus will create market imbalances with implications for other regions, shifting flow patterns and creating price differential disruptions in the backyard of the Henry Hub, Bentek said.
Higher gas prices, favorable market conditions, improved market access and significant cash flow and investment capital are spurring an unprecedented increase in gas production in the Barnett Shale and Deep Bossier Sands in Texas, the Woodford Shale in Oklahoma and the Fayetteville Shale in Arkansas, the Evergreen, CO-based research and analysis firm said.
"We anticipate an increase of 11.3 Bcf/d of additional wet gas production and 9.4 Bcf/d of dry gas production flowing into the Southeast/Gulf between January 2008 and December 2012," said Rusty Braziel, Bentek managing director. "Over the next five years, we expect new gas-fired power generation facilities, industrial load and some residential/commercial demand to drive a modest annual 1.5% demand growth from Texas to Virginia. However, this demand growth is seriously outstripped by the 6.9% average annual supply growth projected in the Southeast/Gulf during the same period."
For a complete copy of this story from Natural Gas Intelligence, please click on the following link http://intelligencepress.com/.
July 17 , 2008 MARKET DISRUPTIONS AHEAD IN THE SOUTHEAST/GULF AS PRODUCTION GROWTH FROM SHALE PLAY COLLIDES WITH PIPELINE CAPACITY BOTTLENECKS OUT OF THE REGION. |
Regional flow and basis price disruptions may happen as early as 2010 as outbound capacity restraints and pipeline bottlenecks cause gas supply build-up in the Southeast/Gulf region
EVERGREEN, CO (July 17, 2008) - BENTEK Energy, LLC, has released the third portion of its "I" of the Storm Market Alert Report, evaluating the impact of anticipated changes in natural gas markets nationwide as more than 75 natural gas pipeline, storage and LNG terminal projects are completed and go into service in the Southeast/Gulf region between now and 2012.
The Part III Report explores current tight outbound pipeline capacity in the region, existing bottlenecks that constrain deliveries to such key markets as Florida and the Northeast, and insufficient planned outbound capacity expansions. This sets the stage for future excess supply build-up in the Southeast/Gulf by as early as 2010, just as more natural production comes onstream and moves east into the region from the hot unconventional shale gas basins. This regional supply surplus will create market imbalances with implications for other regions, shifting flow patterns and creating price differential disruptions in the backyard of Henry Hub in Louisiana, the delivery point of NYMEX natural gas futures contracts.
According to BENTEK's analysis, higher gas prices, favorable market conditions, improved market access and significant cash flow and investment capital are spurring an unprecedented increase in natural gas production activity in the unconventional Barnett Shale and Deep Bossier Shale in Texas, the Woodford Shale in Oklahoma and the Fayetteville Shale in Arkansas.
"We anticipate an increase of 11.3 billion cubic feet per day (Bcf/d) of additional wet gas production and 9.4 Bcf/d of dry gas production flowing into the Southeast/Gulf between January 2008 and December 2012," noted Russell (Rusty) Braziel, managing director of BENTEK Energy. "Over the next five years, we expect new gas-fired power generation facilities, industrial load and some residential/commercial demand to drive a modest annual 1.5% demand growth from Texas to Virginia. However, this demand growth is seriously outstripped by the 6.9% average annual supply growth projected in the Southeast/Gulf during the same period."
One of the most important consequences of this production growth is that pipeline capacity out of the Southeast/Gulf region will fill in less than two years. Outbound pipeline capacity utilization is projected to be at 100% by the winter season 2009-2010 with the demand for capacity more than 2.5 Bcf/d greater than that available on both current and planned pipelines out of the region. New pipeline expansions will help reduce this gap in 2011 and 2012, but not enough to eliminate the Southeast regional excess supply build-up problem altogether.
"This surplus gas will have to go somewhere, and there are several likely scenarios for gas flow displacement," Braziel explained. "Gas traditionally moving into the Southeast/Gulf region from the Midcontinent and West Texas will most likely be displaced into lower-value markets in the Western U.S. Pipeline corridors to the Midwest and Ohio Valley filled with Southeast/Gulf supplies will likely displace Canadian imports. This scenario will likely aggravate the gas-on-gas competition between Southeast/Gulf region producers and Rockies producers as well. The unmistakable conclusion is that more outbound pipeline capacity infrastructure and debottlenecking projects are needed sooner rather than later to be able to move increasing supplies out of the region into higher demand markets that can absorb the increased gas flow."
For more information about BENTEK's "I" of the Storm™ Market Alert series, go to www.bentekenergy.com or call BENTEK at 888-251-1264.
About BENTEK Energy LLC
BENTEK Energy, LLC, is the leading energy markets information company. Based in Evergreen, Colorado, BENTEK brings customers the analytical tools and competitive intelligence needed to make time critical, bottom-line decisions in today's natural gas and power markets. Additional information about BENTEK Energy is available on the Web at www.bentekenergy.com.
Natural-gas pipeline commitments seal deal
A new pipeline linking the Rocky Mountain region to Oregon and northern California will go forward with construction, pending regulatory approvals.
El Paso Corp., which is building the $3 billion Ruby Pipeline, said Wednesday that it has received enough commitments from customers to make the 670-mile link between Opal, Wyo., and Malin, Ore., economically viable.
Customers have provided binding commitments to ship 1.1 billion cubic feet of gas a day, a large share of the 42-inch diameter pipeline's capacity, Houston-based El Paso said.
Rising natural-gas production in Colorado and Wyoming combined with limited pipeline capacity to other locations has depressed prices in the region.
Natural gas nationally cost $12.96 per thousand cubic feet on Wednesday morning versus $9.14 for natural gas coming out of Colorado and Wyoming, and the gap in recent weeks has topped $5, said Porter Bennett, president and chief executive of Bentek Energy, a natural-gas analytical firm based in Evergreen.
"Ruby will be a big help," Bennett said. "Capacity is constrained all the way around."
Wyoming and Colorado natural gas can get to Southern California, and the Ruby will make it easier to get gas to power plants being built on the northern California border, along with the heavily populated Bay Area.
Odds are good that another pipeline in the works will link the Ruby with Portland, Ore., and Seattle, opening up additional markets, Bennett said.
El Paso said the Ruby Pipeline is expected to go into service by March 2011.
For a complete copy of this story from the Denver Post, please click on the following link http://www.denverpost.com/.
Landowners get windfalls from natural gas drilling
FORT WORTH - Pastor Elvis Bowman of the Greater Mount Tabor Christian Center, an aging, homespun church in a low-income neighborhood here, has a new title: energy mogul.
By letting Chesapeake Energy drill wells and pump natural gas from beneath its 50 acres, the church has pocketed tens of thousands of dollars and stands to clear tens of thousands more in royalties each month after drilling begins. The money will help pay for a new $8 million church and performance center, a $12 million mixed-use development nearby and a slate of community programs to help the less fortunate.
"It's been an unexpected treasure," says Bowman, a preacher with a gravelly voice and infectious cackle. "I know without a doubt it was divine."
In this sprawling city and surrounding area, companies are siphoning natural gas from under homes, churches, schools and golf courses in an urban drilling frenzy that's showering property owners with unexpected windfalls. The initiative takes another leap in a few months when drilling begins in Fort Worth's revitalized downtown.
The region, the nation's most active drilling basin, is the epicenter of a natural gas boom rippling across the USA. Companies are boring wells in the unlikeliest of places, transforming large swaths of Texas, Oklahoma, Arkansas, the Rockies, and, most recently, rural Pennsylvania. They're building a vast network of pipelines to transport the gas to population centers, tanks to store the surplus and terminals to house liquefied natural gas (LNG) from overseas.
Much of the infrastructure is springing up in the Gulf of Mexico, which hasn't seen such a building flurry in decades, says Russell Braziel, managing director of Bentek Energy. In Texas, "They're drilling like banshees and finding gas like banshees," he says. "This is fabulous for the consumer."
For a complete copy of this story from USA Today, please click on the following link http://www.usatoday.com/.
May 2 , 2008 |
31 gas storage projects currently planned in the Southeast/Gulf region between 2008-2010 could add more deliverability than outbound pipelines can handle.
GOLDEN, CO (May 2, 2008) - A new BENTEK Energy, LLC analysis of Southeast/Gulf region natural gas storage development reveals that 31 storage projects planned between 2008-2010, including new fields and expansions, could add more withdrawal capacity than there is available pipeline capacity to move the gas out of the region. If all 31 projects are completed, it would add 305 billion cubic feet (Bcf) of working gas capacity and 17.5 Bcf/d of high-deliverability withdrawal capacity from multi-turn, salt-dome facilities.
"During the same time these storage facilities are scheduled for completion, new pipelines will bring incremental domestic production into the Southeast/Gulf region from Texas. New LNG terminals will also add to the rapid build-up of inbound capacity into the region," said E. Russell (Rusty) Braziel, managing director of BENTEK Energy. "The risk of overbuild will not be defined by excess storage capacity so much as it will be driven by an excess of deliverability within the region," he added. "During high withdrawal periods in the winter heating months, storage gas will compete head to head with increasing pipeline deliveries in the region. And, given pipeline constraints on outbound capacity from the area until new construction is completed, we expect to see unprecedented imbalances in regional storage, flows and pricing over the next few years."
Part Two of BENTEK's newly released "I" of the Storm™ report series provides an in-depth analysis of market implications for various storage scenarios in the region during 2008-2010. It also reviews the gas flow competition that is developing between Southeast/Gulf storage, new pipeline projects and LNG terminals and details current changes in flows and basis pricing differentials at the Carthage and Perryville hubs in northeastern Texas and northern Louisiana, respectively, as new capacity moves into the region starting as early as this spring.
"Increased withdrawal capacity from all of the new high-deliverability, salt-dome storage facilities would significantly increase the market's ability to capture price spikes or peaks, effectively capping 'peak shaving' trading opportunities critical to the economics of many of these facilities," Braziel added. "When prices start to spike, the crowd of new storage players will tend to sell into the increase and thus mitigate the increase, dampening price volatility. In fact, a more viable source for extrinsic storage economics for Gulf Coast salt dome facilities will likely be 'trough trolling.' The opposite of peak shaving, we define trough trolling as the use of multi-cycle storage to inject gas during periods of depressed prices and withdraw it only after supply and demand return to a more normal balance."
Part Two of the series also analyzes the first quarter 2009 impact of REX East's pipeline completion to Clarington, OH, and the resultant affect on flows and pricing in the Southeast/Gulf. The report concludes that REX East flows will compete with traditional pipelines bringing supply into the Ohio Valley, displacing 0.7 Bcf/d to 1.0 Bcf/d of Southeast/Gulf region supply. Pipeline expansions within the Southeast/Gulf will exacerbate the situation. The Kinder Morgan/Energy Transfer Midcontinent Express pipeline will begin delivering 1.4 Bcf/d to Transco Station 85, Perryville Hub and points in between in early 2009, at about the same time that REX East is displacing Gulf gas on some of the same pipelines.
For more information about BENTEK's "I" of the Storm™ Market Alert series or the daily Southeast/Gulf Observer™ newsletter, go to www.bentekenergy.com or call BENTEK at 888-251-1264.
About BENTEK Energy LLC
BENTEK Energy, LLC, is an energy markets information company based in Golden, Colorado. The company brings customers the analytical tools and competitive intelligence needed in order to make critical, bottom-line decisions in today's natural gas and power markets. Additional information about BENTEK Energy is available on the Web at www.bentekenergy.com.
April 17 , 2008 PACIFIC NORTHWEST LATE WATER RELEASE LESSENS IMPACT OF SEASONAL RUN-OFF ON REGIONAL GAS AND POWER MARKETS |
Snow melt, temperatures, planned outages at coal and nuclear facilities and a myriad of other key market factors will influence Pacific Northwest energy markets
DENVER (April 17, 2008) - The 2008 Pacific Northwest snow melt and its consequent impact on power and gas markets is unusually late this year, according to a newly launched publication from BENTEK Energy, LLC. Cool and dry spring weather, combined with available water within the normal range will moderate the impact of the seasonal run-off, or surge on regional gas and power prices. However, uncertainty in Pacific Northwest energy markets will remain high due to other factors such as unexpected weather developments, plant outages and power transmission line constraints.
"The number one question in the Pacific Northwest this time of year is always, 'When will the water run?'" says Kim Ward, BENTEK senior analyst. "This is one of the most important events influencing the Pacific Northwest energy market each year. When the snow melt begins, power generation increases, the demand for gas fired generation declines and gas prices typically soften. This year, flows over the Dalles Dam are not expected to impact the market at least until May 1st, a full month later than last year."
Hydropower facilities are responsible for up to 60% of the power generated in the Pacific Northwest, and the uncertainty of water flow patterns creates a power supply scenario unlike anywhere else in North America. The availability of hydropower is a function of several factors, the most important of which is the runoff from melting snow in the region. In past years, the advent of runoff has been the major driver of a sharp divergence in area power prices; this year, with runoff delayed until well into maintenance season, other factors such as plant outages and local weather developments are expected to overshadow the release of water as a primary determinant of regional energy pricing.
A new daily report and alert service from BENTEK, the Pacific Northwest Observer™, provides a continuing assessment of a wide range of factors that impact power and gas prices in the region, including natural gas capacities and flows, weather forecasts, power transmission constraints, water level behind key dams, water management for fish passage activities and planned outages at coal and nuclear power plants.
BENTEK has partnered with Industrial Info Resources (IIR) to provide plant outage data in the Pacific Northwest Observer™. Currently IIR indicates that outages at one coal plant and one nuclear plant are influencing the Pacific Northwest market, while three major area coal plants will be out in the next month. IIR also provides near-real-time information on unplanned outages, which can affect the market even more.
"We are very pleased to provide IIR outage information to our clients as part of our Pacific Northwest energy market coverage", said Samantha Fox, BENTEK market analyst for the region. "IIR is the gold standard for plant outage and maintenance data. Combining this with BENTEK's detailed analysis of water flow, natural gas use and other key variables provides a comprehensive picture of the energy supply-demand balance in the Pacific Northwest."
For more information about BENTEK's daily Pacific Northwest Observer™, go to www.bentekenergy.com or call BENTEK at 888-251-1264.
About BENTEK Energy, LLC
BENTEK Energy, LLC, is an energy markets information company based in Golden, Colorado. The company brings customers the analytical tools and competitive intelligence needed in order to make critical, bottom-line decisions in today's natural gas and power markets. Additional information about BENTEK Energy is available on the Web at www.bentekenergy.com.
About IIR
Industrial Information Resources Incorporated (Houston) is the most comprehensive provider of outage information and a world leader in news on the industrial and energy-related markets. For more information about IIR go to www.iirenergy.com.
April 4 , 2008 |
New data shows U.S. ethanol production substantially outpacing first quarter 2007 levels
DENVER (April 4, 2008) - BENTEK Energy, LLC, estimates that the United State's ethanol plant fleet has produced 1.9 billion gallons of ethanol through the first quarter of 2008. This outpaces last year's production in the first quarter by 517 million gallons, or nearly 37%. Average daily production through the first quarter of 2008 was approximately 21.4 million gallons per day, which compares to an average of 15.6 million gallons per day in the first quarter 2007 and an average of 17.8 million gallons per day for all of 2007.
"Not only is the quarterly growth impressive, but it also reaffirms growth patterns in the industry that we saw going back to 2006," says Jack Weixel, BENTEK senior analyst. "If this trend continues, 2008 will be another record-setting year for U.S. ethanol production."
BENTEK monitors the deliveries of natural gas from interstate pipelines to approximately 30% of all U.S. ethanol facilities. This number is then modeled to monthly fuel ethanol output data provided by the U.S. Energy Information Administration (EIA) to estimate a real-time daily U.S. estimate of ethanol production based on gas inputs. The U.S. has approximately 134 ethanol plants in service in 2008 compared to 68 plants five years ago in 2003. This year, expansions and new plants scheduled to go online could push total ethanol production to over 7.7 billion gallons if performance trends in the first quarter continue through the rest of the year. Total production of ethanol was approximately 6.5 billion gallons in 2007 according to estimates provided by BENTEK.
A daily report from BENTEK Energy, the Industrial End Users Report™, provides a continuing assessment of natural gas use at over 750 U.S. industrial facilities, including ethanol plants, refineries, fertilizer manufacturers and other industrial facilities.
For more information about BENTEK's Industrial End Users Report™, call BENTEK at 888-251-1264 or click on the above link.
Growing pains en route / Natural gas markets are bound to see some volatility in the short term as several projects come on line and create tension points in the supply channel, but longerterm the work may lower prices
A rush of new projects moving natural gas from areas like Texas' Barnett Shale through a pair of Louisiana pipeline hubs could increase volatility for the fuel in the short term and drive down prices in the long term, according to a new study.
Some 40 pipeline, storage and liquefied natural gas terminal projects will come on line over the next 18 to 24 months, providing billions of cubic feet of new gas supplies for the key pipeline hubs of Perryville and Henry Hub in Louisiana.
Those new sources of fuel are likely to outpace capacity to move the fuel farther east to markets including Florida, Ohio and New York, according to data compiled by Bentek Energy, a Evergreen, Colo.-based research and consulting firm.
That could first mean greater price swings as markets figure out how to accommodate the new supplies and, ultimately, put downward pressure on prices because of oversupply.
Lower prices at the Henry Hub would affect prices throughout the country, because it's a widely used benchmark price.
"It's too much gas in the wrong place," said Rusty Braziel, managing director of Bentek. "It's going to be a roller coaster ride for a while."
For a complete copy of this story from the Houston Chronicle, please click on the following link http://www.chron.com/.
Natural Gas Rises on Colder Weather, Columbia Pipeline Closure
Feb. 6 (Bloomberg) -- Natural gas rose after forecasts for colder weather in the Midwest and Northeast, and Columbia Gulf Transmission Co. shut a pipeline in Tennessee.
Below-normal temperatures may push into the Midwest starting Feb. 9 and last through Feb. 11, spreading eastward early next week, according to forecaster MDA Federal Inc.'s EarthSat Energy Weather of Rockville, Maryland.
Natural gas for March delivery rose 5.2 cents, or 0.7 percent, to settle at $7.994 per million British thermal units at 3:08 p.m. on the New York Mercantile Exchange. It earlier rose to $8.08. Prices have advanced 6.8 percent so far this year and are 4.9 percent higher than a year ago.
Columbia Gulf Transmission suspended supplies to its natural-gas customers after an explosion at a compressor station in Macon County, Tennessee. The station increases pressure along the portion of the pipeline that runs from Louisiana to the West Virginia-Kentucky border.
The 4,200-mile pipeline can carry 2.1 billion cubic feet of gas a day, though less was flowing before the explosion, said Kelly Merritt, a spokesman for the Houston-based company. Customer needs are being met with gas from storage, he said.
Tornadoes have swept through Arkansas, Mississippi, Tennessee, Kentucky and Illinois, killing at least 44 people.
''Depending on the extent of the damage and how long it takes to fix, it could be a big deal,'' said Bentek Energy analyst Jack Weixel in Denver. ''People may be getting nervous about having enough gas.''
For a complete copy of this story from Bloomberg, please click on the following link http://www.bloomberg.com/.
January 23 , 2008 BENTEK ENERGY: REX WEST Pulls Natural Gas from Competing Pipelines |
In its first two weeks of operation, Phase II of REX has pulled gas from other regional pipelines which previously had moved Rockies production into markets south and west of the region
DENVER (January 23, 2008) - BENTEK Energy, LLC, reported today that the company's Weekly Rockies Observer™ service reveals that deliveries from the new Rockies Express (REX) West pipeline system into ANR, NGPL and Northern Natural (NNG) have reached 438,000 MMbtu/d. As of today's scheduled flows, the NNG interconnect is at 92% capacity while ANR and NGPL are at 28% and 14% capacity, respectively. The company's analysis also indicates that most of the new capacity has been filled with gas pulled from other regional pipelines which had previously been moving that gas into markets south and west of the Rockies. Natural gas prices in the Rockies have increased significantly, with Colorado Interstate Gas (CIG) prices only $0.32/MMbtu below Henry Hub prices, according to ICE Day Ahead Indices traded on January 22, 2008.
"This interregional pipe-on-pipe competition can be expected to intensify in the coming weeks, to the benefit of Rockies producers," said Rusty Braziel, BENTEK Managing Director. "REX West is already starting to achieve the objectives of its anchor shippers, most of whom have significant gas production in the Rockies region."
REX is the $4.4 billion system owned by Kinder Morgan, ConocoPhillips and Sempra that will enable the delivery of 1.8 Bcf of supplies from areas in Colorado, Utah and Wyoming. This gas will ultimately reach markets in the Midwest and Northeast. Phase II of the REX system was placed into service on January 12, 2008, providing the ability for shippers to move gas from the Cheyenne Hub to interconnects in Nebraska, Kansas and Missouri. Phase ll will finish when REX reaches the Panhandle Eastern (PEPL) interconnect in Audrain County, MO. In early 2009, REX East (Phase III) will extend the pipeline to Lebanon and Clarington, OH, and provide a delivery capacity of 1.8 Bcf/d.
BENTEK's Weekly Rockies Observer™ service indicates that incremental Rockies production has been a negligible factor in new REX West throughput. Instead, flows shifted from regional pipelines including Cheyenne Plains and TransColorado into the REX system. In addition, REX is pulling significant gas volumes from Opal which might otherwise be flowing into Kern River, CIG or Northwest Pipeline (NWP).
According to Braziel, "It is still too early to be sure if these changes in the market are predictive. Whether these events are being driven primarily by transportation economics or other factors such as weather, mid-month contractual commitments or the fact that the PEPL interconnect is not yet in service remain open questions."
A weekly report and daily alert service from BENTEK Energy, the Weekly Rockies Observer™, provides a continuing assessment of natural gas flows, capacity and pricing in the Rockies region.
For more information about BENTEK's Weekly Rockies Observer™, go to www.bentekenergy.com or call BENTEK at 888-251-1264.
Bentek CEO: Rockies-Style Access Trouble Brewing in Gulf Coast Region
Long-suffering Rockies producers are seeing the light at the end of the basis tunnel as the landmark Rockies Express Pipeline LLC (REX) wends its way eastward. But what the industry has yet to open its eyes to is the trouble brewing down South, says an industry analyst.
"There's a possibility that the Gulf of Mexico is going to experience its own little 'Rockies' problem," says Bentek Energy LLC CEO Porter Bennett. "You've got a whole bunch of new gas coming in via the different pipelines. Production is increasing very strongly in East Texas, Fort Worth, Arkla and Arkoma. You've got all these new pipelines bringing it to Perryville [LA]."
In a forthcoming study, Bentek looks at the Gulf Coast region, which it defines roughly as the northern edge of Arkansas down to Houston and out to the Gulf and across to the eastern edge of Louisiana. "The problem is that the ability to get gas out of that region hasn't expanded," Bennett told NGI, noting that on peak days the legacy pipelines out of the Gulf Coast run 90-95% full.
"I don't think people fully appreciate the magnitude of what's scheduled to be developed out there [in the Gulf]," Bennett says. "A second part of it is I think people were real focused on getting more East Texas gas to the Gulf where they just assumed you could take it away from there, and because of the way the market is, it seemed like you ought to be able to. But the reality is [the pipeline capacity] is not there."
The Bentek report, to be titled "'I' of the Storm," is to be published in about a month.
For a complete copy of this story from Natural Gas Intelligence, please click on the following link http://intelligencepress.com/.
January 9 , 2008 BENTEK Energy Reports Natural Gas Deliveries to Dual-fired Power Plants Up 31% in 2007 |
New data shows power generation is relying more heavily on natural gas and continues to move away from fuel oil
DENVER (January 9, 2008) - BENTEK Energy, LLC, announced today that natural gas deliveries to dual-fired power plants increased by an average of 31% per day when comparing 2007 to 2006. This equates to an additional 0.5 Bcf/d (billion cubic feet per day) of gas consumption by these switchable power plants. When comparing 2007 to 2005, natural gas use at these plants increased by an average of 52% per day.
"Natural gas prices have been at a discount to fuel oil for much of 2007. This leaves natural gas as the low-cost fuel alternative when compared to increasing petroleum prices," said Jack Weixel, Senior Analyst at BENTEK Energy.
BENTEK Energy estimates that total natural gas burn at U.S. power plants was up 2.1 Bcf/d in 2007, an increase of 13%, when compared to 2006. The 0.5 Bcf/d of fuel used in switchable generation capacity was nearly 25% of the overall increase. The sample used by BENTEK Energy to analyze natural gas burn in the power generation sector includes over 460 natural gas fired power plants, of which 112 are dual-fired facilities. These dual-fired facilities generate approximately 94 GW (gigawatts) of base-load capacity which represents approximately 8% of total power production in the United States.
A daily report from BENTEK Energy, the U.S. Power - Gas Burn Report™, provides a continuing assessment of natural gas use at U.S. Power Plants. To request a trial copy of BENTEK's U.S. Power - Gas Burn Report™, click here.
In High Crude/Gas Ratio, Fuel Switching 'Harbinger of Things to Come'
With oil prices hovering around $100/bbl and natural gas trading below $8/Mcf, gas deliveries to dual-fired power plants jumped last year, Bentek Energy LLC reported Wednesday.
Fuel switching increased by an average of 31% per day in 2007 over 2006, which "equates to an additional 0.5 Bcf/d of gas consumption by these switchable power plants," the Golden, CO-based energy consultant stated. Between 2005 and 2007, gas use at these plants rose by an average of 52% per day.
Managing Director Rusty Braziel said Bentek reviewed gas scheduled to be delivered daily into 460 gas-fired power generation plants.
"Recently we carved out just the 112 of this group that have fuel switching capabilities to see the level of switching going on over the past year," Braziel said. "It was a big number...Of course, this is no big surprise when oil is near $100 and gas is below $8. But it is a big shift, and probably a harbinger of things to come as the market continues to adjust to a high crude/gas ratio."
For a complete copy of this story from Natural Gas Intelligence, please click on the following link http://intelligencepress.com/.
Surging natural gas production in Texas in December 2007 may have mitigated price increases during the recent cold snap in the Lower 48 States
According to Bentek Energy, LLC, an energy markets information company, natural gas originating in Texas and flowing to other States hit a record high of about 10 Bcf per day recently. This is an increase of about 26 percent above levels in December 2006. These additional flows of natural gas production would have eased pressure on natural gas prices in some markets during the recent cold spell.
For a complete copy of the Natural Gas Weekly Update from Energy Information Administration, please click on the following link http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp.
Braziel: What Do I See Coming?
New pipelines will shift flows and capacities. The Rockies Express will push supply surpluses into eastern markets. LNG could wreak havoc with Gulf Coast pricing. Or not. Independence Hub is flowing almost 1 Bcf/d. Crude oil prices continue to flirt with $100/bbl. The sub-prime mess could suck down the economy. The falling US dollar is roiling import/export economics.
The big dog of these developments is Rockies Express. It will pull Summer Rockies prices into parity with other producing regions and put pressure on prices in competing supply basins. Most industry forecast models have this shift factored into the numbers. Less understood is the impact of new pipeline, storage and LNG terminal construction in the Southeast/Gulf region. We loosely define this as a 650-mile wide swath from the Bossier Sands and Fort Worth producing basins in Texas eastward to Transco Station 85 in Choctaw County, Alabama and down to the Florida Panhandle. This area is experiencing an energy infrastructure construction boom the likes of which have not been seen in decades.
There are over 15 natural gas pipeline projects already or soon to be underway that will shift flow patterns, disrupt regional pricing relationships and realign the value of firm transportation capacity across the pipeline grid. Projects from Boardwalk, Centerpoint, Spectra, Energy Transfer, Enterprise, Kinder Morgan, Enbridge and others will add over 7 Bcf/d of pipeline capacity from the prolific Barnett, Woodford and Fayetteville shales and the Bossier Sands region across the Southeast/Gulf region. A dozen new storage facilities in the region could be in place before the end of 2008, adding 12 Bcf/d of high deliverability withdrawal capacity. Independence Hub has come on strong and is already flowing almost 1 Bcf/d. Four new LNG terminals will add sendout potential of 10 Bcf/d before the end of Q1 2009. And in early 2009 you can add to all this about 1 Bcf/d of Southeast/Gulf supplies which have traditionally moved into the Ohio region that could be displaced by Rockies Express deliveries.
So what does all this mean for the market?
For a complete copy of this story from The Desk, please click on the following link http://www.scudderpublishing.com/.
December 17, 2007
Natural gas originating in Texas and flowing to other states via interstate pipelines increased to a record-high 10 billion cubic feet
Bentek Energy LLC announced Dec. 11 that natural gas originating in Texas and flowing to other states via interstate pipelines increased to a record-high 10 billion cubic feet of natural gas per day (Bcfd) during the Dec. 8-9 weekend.
The surge in Texas natural gas leaving the state is largely the result of increased production from the Fort Worth and East Texas producing basins, which has been moving eastward on CenterPoint Energy's new Carthage-to-Perryville pipeline, according to Bentek. CenterPoint flows have been averaging 1.4 Bcfd in December compared to 0.3 Bcfd last year, an increase of 1.1 Bcfd, according to the company.
For a complete copy of this story from the Fort Worth Business Press, please click on the following link http://www.fwbusinesspress.com/.
Braziel: Almost Bigger than the Beatles
Our conversation last week with Bentek Energy's Rusty Braziel on trends in Canadian gas flows and what the North American market might look like in '08 sparked all sorts of tangential thoughts on supply, prices, policy and, of course, potential natural gas-related publications and data services. He says that by the end of next year, something so big will be happening that it should make all other market fundamentals seems small indeed. And, by his read, it could possibly pound gas prices down to prices we've not seen in many years. Huh? What? Like, $3 natural gas? "So Rusty," we asked, "this thing will be bigger than the growth in LNG?"
"Absolutely." Bigger than changes in Canadian gas flows? "Much." Bigger than REX coming on line? "Yup, bigger than REX," he said. "Bigger than the Beatles?"
"Well, maybe not bigger than the Beatles," he says, "it's close, though." What can it be you ask? We'll give you a hint: It's deep down Southeast (that is, from mid-Texas to Mississippi), vast and has many, many moving parts. Braziel tells us that there is currently about $20 billion in mostly natural gas and crude infrastructure being built out down there. "We've not seen that level of pipeline construction in the US since the 1950s or 1960s. When all of that finally kicks in, it's going to completely change everything that anybody ever thought they understood about basis differentials," Braziel says.
For a complete copy of this story from The Desk, please click on the following link http://www.scudderpublishing.com/.
December 11, 2007
Bentek: Gas Originating in Texas, Flowing to Other States 'Going Nuts'
Natural gas originating in Texas and flowing to other states via interstate pipelines increased to a record high 10 Bcf/d last weekend (Dec. 8-9), mostly because of the surging output from the Barnett Shale and East Texas producing basins, according to a report by Golden, CO-based energy consultant Bentek LLC. Texas gas exports jumped 26% compared with the same period a year ago.
"Volumes moving out of the state on interstate pipelines have been going nuts," Bentek Managing Director Rusty Braziel told NGI. However, he said it's not just from one place -- "volumes are up all over. A lot of the weakness in [Houston] Ship Channel prices that we saw last month seem to be the result of high production and maxed out flows on many pipes leaving the state."
For a complete copy of this story from Natural Gas Intelligence, please click on the following link http://intelligencepress.com/.
December 7, 2007
Bentek: US natural gas exports to Canada this year were actually up 12.5 percent
Not long ago we read in an EIA outlook report that Canadian natural gas exports were way down this year, a trend that the agency has reported since last year. EIA also said US exports to Canada are flat, if not down. These are trends generally held as conventional wisdom. Until last week maybe. The good folks at Bentek Energy just released the latest in a steady stream of new pipeline flow data publications - this one covering that vast area north of the border. The new Weekly Canadian Examiner somewhat closes the circle on Bentek's coverage of the North American pipeline network. Its first issue was a barnburner: Against conventional wisdom, the paper reported that US natural gas exports to Canada this year were actually up 12.5 percent, while Canadian exports to the US this year were actually flat, and not in decline. Bentek flow data revealed that an average of 170 MMcf/d of additional gas has been flowing North from the US versus last year's flow tallies.
We called up Bentek's Rusty Braziel and new publication editor/analyst Jack Weixel for more on the publication and general trends in the market. Braziel says the attention the new pub has received has been good, and from Canadian subscribers "much less grief for not including this data sooner."
"It's sort of been on our to-do list for a while," Weixel says. "We've actually been collecting Canadian flow data for quite some time. Our data bases go back to 2001."
For a complete copy of this story from The Desk, please click on the following link http://www.scudderpublishing.com/.
November 28, 2007
Bentek: Gas Imports from Canada holding steady
Gas imports from Canada are keeping pace with 2006 levels despite widespread predictions of a sharp decline, according to a report released Tuesday by Bentek Energy. Meanwhile, year-to-date gas shipments from the US to Canada are up 12.5%.
Bentek said its pipeline flow data show the bulk of the 170,000 Mcf/d increase in exports has occurred at the border points of St. Clair and Ojibway, Michigan, through which gas moves to the Dawn Hub in Ontario. That gas has come from Great Lakes Gas Transmission or from pipelines moving supplies north from the Gulf of Mexico and the Midcontinent, the report noted.
Exports to Ontario jumped considerably the past two weeks," Bentek said. "This is due in part to maintenance ending on Vector Pipeline, which increased deliverability by 300,000 Mcf/d, but also due to a jump in southwestern Ontario demand."
But Bentek cautioned that US-to-Ontario shipments may subside as Vector - which connects the Chicago market to Dawn - is scheduled to perform maintenance during the holiday season. "Vector could not provide an exact date for the maintenance or an estimate of the impact, but up to 1.1 Bcf/d could be at risk," Bentek said.
For a complete copy of this story from Gas Daily, please click on the following link www.platts.com.
November 28, 2007
Bentek Finds Surprise: Canadian Gas Imports Flat, U.S. Exports Higher
U.S. natural gas exports to Canada are up 12.5% this year, adding on average more than 170 MMcf/d of gas flowing north versus a year ago, while Canadian imports -- forecast to be sharply down -- are flat, according to an analysis by Bentek Energy LLC.
Bentek's analysis of gas pipeline flow information discovered that an average increase of 170 MMcf/d has been flowing mostly into the Dawn Hub in Ontario via border crossing points at St. Clair and Ojibway, MI. Gas at these export points may be sourced from Great Lakes Gas Transmission or from pipes bringing gas north from the Gulf of Mexico and the Midcontinent, Bentek noted.
"The numbers revealed a couple of unexpected developments," said Bentek Managing Director Rusty Braziel. "First, Canadian imports are not down this year the way they were from '05 to '06. That is a change from what many folks in the industry have been saying. Second, the U.S. is shipping more gas into Canada, presumably to meet increased demand. The U.S. always delivers significant volumes to Canada, some sourced from U.S. production -- a portion of that comes across the border from Canada and then makes the trip back across to Canada. But that is not what is going on this year. In 2007 it is the U.S. production volume that is pushing the U.S. export numbers up."
For a complete copy of this story from Natural Gas Intelligence, please click on the following link http://intelligencepress.com/.
November 27, 2007
2007 U.S. Gas Exports to Canada Increase 12.5%; Imports from Canada Stay Flat
Rockies producers should see rise in regional price differentials improve as Rockies Express (REX) pipeline Phase II goes into service in early 2008. Producers in the Anadarko and Permian could see a negative price impact.
DENVER--(BUSINESS WIRE)--According to natural gas pipeline flow information monitored by BENTEK Energy, U.S. natural gas exports to Canada are up 12.5% in 2007, adding an average of more than 170 MMcf of natural gas per day flowing north versus 2006. At the same time, imports into the U.S. from Canada are flat despite expectations of impending declines.
BENTEK flow data show that this average increase of 170 MMcf/d has been flowing predominantly into the Dawn Hub in Ontario via border crossing points at St. Clair and Ojibway, MI. Gas at these export points can be sourced from Great Lakes Gas Transmission or from pipelines bringing gas north from the U.S. Gulf of Mexico and the Midcontinent.
"Our analysis clearly demonstrates that this increase in U.S. exports is from supplies which originate in the U.S.," said Jack Weixel, BENTEK senior analyst. "Since Canadian gas can make its way back into Canada via the Great Lakes system, the import/export statistics can be misleading -- with increased exports in fact coming from increased Canadian supplies. In 2007, this is not the case. We know this because flow data from Canada from the Emerson border crossing point into Great Lakes shows that Canadian import volumes at this point have decreased by 1.6%. Thus, increased flows into the Dawn Hub must be the result of increased supplies from the U.S."
The BENTEK analysis also revealed that total imports to the U.S. from Canada have stayed flat this year despite production declines -- imports into the U.S. from Canada have dropped only about 0.4% year to date versus last year. This compares to a 4.1% decline in 2006 versus 2005.
Many market participants have been expecting the decline of Canadian production to lead to declining imports to the U.S., but so far this year that has not occurred. Total Canadian production for 2007 is likely to decline by only 2.3% versus 2006 levels. Average daily marketed production flowing on inter-provincial pipelines in Canada totaled 14.8 Bcf per day in 2006 compared to 14.5 Bcf per day year to date in 2007. In 2006, nearly 77% (11.4 Bcf) of production came from Alberta. This year, Alberta production is averaging just shy of 11.1 Bcf per day, accounting for nearly the entire drop in total Canadian production. In the third quarter of 2007, daily production in Alberta dipped below 11 Bcf per day, and month-on-month average Alberta field receipts on NOVA have been dropping since September 2006. Total Canadian demand is flat this year compared to 2006, with intra-provincial demand on the TransCanada NOVA system in Alberta showing a slight increase of 43 MMcf per day this year.
A new report from BENTEK, the Canadian Examiner™, provides an assessment of these developments, including Canadian natural gas production, flows, exports and imports, pricing and demand. For more information about BENTEK's Canadian Examiner™ and other market data, go to www.bentekenergy.com or call BENTEK at 888-251-1264.
About BENTEK Energy LLC
BENTEK Energy, LLC is an energy markets information company with offices in Golden, Colorado. The company brings its customers the analytical tools and competitive intelligence needed in order to make critical, bottom-line decisions in today's natural gas and power markets.
Click here for more information about BENTEK's Canadian Examiner or call BENTEK at 888-251-1264.
Friday, December 1, 2006
Mercury rises on natural gas prices
Heating bills to follow as cold weather drifts in across USA
By Barbara Hagenbaugh
WASHINGTON — Natural gas prices are soaring on commodity markets, a development that could lead to higher-than-expected heating bills this winter.
Natural gas prices trading for delivery in January rose 11% in November and are trading near a 10-month high.
Much of the gain has come in the last week. The reason: Cold weather is sweeping across the USA, leading to increased demand and, thus, higher prices.
“It's cold, and it's cold across a large swath of the country. So demand is up,” says Rusty Braziel, managing director of Bentek Energy in Golden, Colo.
Nationwide, natural gas demand has risen 15% since the day after Thanksgiving, according to Bentek data. Demand in the western half of the USA, which has seen the initial burst of cold weather, “has gone off the scale,” Braziel says.
Meteorologists warn that the wintry weather will hit the East Coast this weekend.
Rising heating demand is leading to a faster-than-anticipated decline in natural gas inventories. Still, inventories are up 6% from a year ago and are 7% higher than the five-year average for this time of year, according to data from the Energy Department out Thursday.
Friday, November 17, 2006
Bentek Energy’s Rusty Braziel called Us Late This Week for a briefing on the firm’s latest round of new products and services for gas and power traders. We were impressed. The new info and data services include the Natural Gas Supply/Demand Balance Report, the Flash! Pipeline Alert Notices and, on the power side, the Nuclear Power Plant Status Report, aka, the Nuke Report and others.
This last one computes the megawatts displaced and the incremental gas burned due to nuclear power plants being offline. Said another way, it tells you what gas is burned to replace all nuclear power plants that are offline at a point in time. Finally, the Pacific Northwest Hydro/Transmission group of weekly reports.
Lots of new stuff, way too much to detail in one story. For now, we think everybody needs to check out the new Natural Gas Supply/Demand Balance Report. This one provides an estimate of total US demand, production, imports/exports and storage injections/withdrawals. Think of it as a daily version of the EIA Natural Gas Monthly report, because the numbers are directly comparable to EIA. The report’s Demand section provides regional totals from all delivery points on each interstate pipeline that are classified as demand points – power plants, local distribution companies, industrials, municipals, etc.
Bentek collects all volumes scheduled into these points each day, uses the total as a proxy for the demand for all facilities receiving gas via interstate pipelines, then models the demand received by all other facilities by correlating Bentek demand data with historical demand data from the US Energy Information Administration (EIA).
They next go through the same process in the Supply section for gathering systems, natural gas processing plants, producing fields, etc. Daily Canadian Imports/Exports are summarized directly from pipeline receipts and deliveries, and are near equivalent to EIA historical data. Similar modeling processes are used to estimate Mexico exports/imports. LNG imports are estimated by using LNG deliveries from each LNG terminal into the interstate pipelines attached to those terminals. This stuff is very solid.
The good folks at Bentek forwarded to us most of the key bits you might find in a daily Supply/Demand Balance Report so we could share it with The Desk subscribers. Have at it. We’ll run our full interview with Braziel on all the new products next time.
NGI's Daily Gas Price Index
Published : November 13, 2006
Gas demand (including Mexican exports) has fallen a whopping 14.5 Bcf/d since levels on Nov. 2, according to BENTEK Energy's new Supply/Demand Balance report, released for the first time on Friday. BENTEK Energy officials said the report is the only source of actual and timely daily gas supply and demand data collected from pipelines nationwide. The report shows that for the week ending Nov. 10, gas demand fell from 64 Bcf/d on Monday to 57.5 Bcf/d on Friday and the warmer weather was mostly to blame. On Nov. 2, demand was 72 Bcf/d.
With demand dropping rapidly, the need to import gas from Canada also has fallen sharply. BENTEK shows Canadian gas exports to the U.S. are down 13% this month to about 7.7 Bcf/d compared to levels in November 2005. Last Monday about 8.1 Bcf/d of Canadian gas was being imported, but on Friday imports were down 1 Bcf/d to 7.1 Bcf/d.
The weather has been so much warmer than normal during the past week that BENTEK 's report is showing about 4.7 Bcf of gas had to go into storage because consumption was inadequate and there was no other place for all that supply to go. "It would amaze us if the EIA did not report an injection for this week in the next storage report," said BENTEK Managing Director Rusty Braziel.
If the winter weather doesn't show up over the next few weeks, the market could be in for some significant additional downward pressure on prices, said BENTEK President Porter Bennett. He noted that since September, the significant number of nuclear plant outages due to maintenance has boosted gas demand about 2 Bcf/d. Demand from power generation has been running about 5 Bcf/d greater than during the same period in 2005. There also has been higher industrial gas use. But Bennett expects those factors to vanish quickly in the coming weeks, and if there isn't a corresponding boost in heating demand due to the arrival of normal winter weather, prices certainly will head south. He noted that many forecasters are expecting a mild winter.
Although there was a strong recovery in Rockies prices during the week, prices there are likely to backtrack again, according to BENTEK. Opal ended Friday down only about 40 cents from where it was the previous Friday despite bottoming out near $1.25 at one point during the week. Warm weather and excess supply has been to blame. Gas production has grown so rapidly that pipeline capacity additions cannot keep pace. Maintenance outages on Kern River and Northwest during the week didn't help, but lack of adequate export capacity will continue to be a serious issue this winter. Until the Rockies Express pipeline enters service, Rockies producers can expect continued depressed conditions. And even with the completion of the Entrega portion to the Cheyenne Hub in January, most excess Rockies gas still will be locked up at the Cheyenne Hub.
BENTEK shows Greater Green River Basin gas production up about 500 MMcf/d this year compared to last. Uinta-Piceance Basin production is up 311 MMcf/d compared to last year. And the Powder River Basin is up about 160 MMcf/d. That's about a 971 MMcf/d increase in production in the Rockies compared to levels last year without a corresponding increase in takeaway pipeline capacity, BENTEK noted. Production growth in these western basins is the primary reason that total U.S. gas production is up about 1.8% so far this year, BENTEK's data shows. Production increases have been much smaller in other basins -- although producers also have gained ground in the Appalachian Basin, where production is up about 14% compared to 2005 levels.
BENTEK Energy Natural Gas Pipeline Flow and Capacity Data and Analytics Now Available Through Logical Information Machines (LIM)
Thursday September 28, 9:00 am ET
AUSTIN, Texas--(BUSINESS WIRE)--Logical Information Machines (LIM) and BENTEK Energy, LLC have agreed to make BENTEK's Natural Gas Flow and Pipeline Capacity data sets available via LIM's data management warehouse services.
LIM is a leading aggregator and redistributor of information to the energy industry and financial services sectors offering access to data gathered from more than 200 sources so subscribers can perform sophisticated analysis of energy, equity, bond and commodity data. BENTEK Energy provides high quality, immediate market information about natural gas production volumes, imports, pipeline transportation flows, storage injections and withdrawals, and demand. Through this alliance, joint customers of the two companies will have the tools to combine information from BENTEK's Energy Data Warehouse with LIM's extensive data and analytic capabilities.
"Offering BENTEK's natural gas flow information, storage estimates, and receipts alongside LIM's other deep energy data sets such as pricing, degree data and government energy statistics is a natural extension and will provide immediate value to subscribers," remarked Brian Leo, LIM senior account manager.
"Recent developments have again underscored the importance of energy industry fundamentals analysis. Access to immediate, quality information about rapidly changing supply, demand and pricing dynamics is key to help mitigate risk in highly volatile markets," said Rusty Braziel, BENTEK managing director. "Through this affiliation with LIM, we enhance the value of the BENport Energy Data Warehouse and bring our value proposition to an expanded group of potential customers."
Click here for the full text of the press release.
U.S. Power Plants Reach All-Time High Natural Gas Consumption in Response to Summer Heat Wave
BENTEK Energy launches new U.S. Power -- Gas Burn Report to monitor daily natural gas consumption for power generation
DENVER (August 22, 2006) – The U.S. has been sweltering under extremely hot temperatures during both July and August this summer, resulting in record-setting electricity generation coast to coast. As a result, U.S. power plants have been burning natural gas at all-time high record rates as consumers crank up air conditioners nationwide to beat the heat.
According to data released by BENTEK Energy, the leading provider of daily energy market supply and demand information and analysis to both the energy and financial services sectors, approximately 29.6 billion cubic feet per day (Bcf/d) of natural gas was burned in July or 17.5% over the record burn in August 2005 of 25.2 Bcf/d. August month-to-date is even higher, recording 30.2 Bcf/d through August 22nd with a record breaking daily burn of 42.3 Bcf/d on August 2nd.
Due to the significant impact this summer’s unprecedented gas consumption could have on total gas demand and natural gas storage levels, BENTEK has created a new daily report of natural gas consumed by power generation plants. The BENTEK U.S. Power – Gas Burn Report covers 427 plants across the United States, representing almost 50 percent of the natural gas burned for power generation.
Click here for the full text of the press release.
Monday, July 24, 2006
BENTEK Energy President and CEO Porter Bennett sees risk in lower natural gas prices
Oil and gasoline costs may be hovering near all-time highs, but natural gas prices are at less than half the record set late last year.
That means that people who heat their homes with natural gas, or about three out of five U.S. households, could see their bills decline this winter for the first time in five years.
Low prices could have a downside, says Porter Bennett of Bentek Energy. If prices stay low, energy companies will have less incentive to drill for natural gas. That will lead to lower supplies and, in the long run, higher prices, he says.
"The danger is that (the price) goes down too far and for too long. Then you've set up the next cycle," he says.
Click here for the full text of the article.
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